The first response of all too many out there to the 401(k) situation has been to blame the victim, though they go about it in different ways.
One school of thought says people don’t know they need to save between ten and fifteen percent of their salary for retirement costs alone, and argues that a combination of education and automatic savings plans can solve the problem. Others are more judgmental and claim we spend much too much on luxury items. This take is, in fact, quite popular. David Bach’s Latte Factor addresses this point, and so does a current popular meme, that we spend way too much money on smartphones and cable television, something I heard said on CNBC earlier this week.

(A quick digression: In the future, can we make it a policy to ask anyone who complains about Americans spending money on such things as smartphones and premium cable channels if they themselves enjoy such things, and, if so, what they cost them per month? This moaning and groaning by people wearing what appear to be designer suits about how those lower on the income scale are spending their own funds is getting tiresome.)

All of this is a way of saying it’s a rare moment indeed when common sense about how to solve our savings problem is heard from any corner, never mind the financial services sector of the American economy. So we have more than one reason to be grateful to HelloWallet, the innovative online investment and savings service, which released a myth-busting report this week taking a hard look at why one out of four people borrow against or cash out of their 401(k) plans, something the industry calls “leakage.”

A gusher is more like it.

When HelloWallet broke down survey data, they discovered three-quarters of people dipping into their retirement savings are doing it to pay for short-term needs and, no, we’re not referencing emergency trips to Starbucks to deal with sudden caffeine deprivation. We’re talking about medical bills, car repair and the like. Giving further evidence to this truth: the lower down on the income scale a person is, the more likely they are to tap into their retirement funds. Another group at high risk: households headed up by men and women in their forties, who are likely facing such pressures as childrearing and college costs. (Dear readers, that’s my people. I’ve been known to complain my household budget is less a plan and more a non-stop, not-fun game of whack-a-mole.)

So, say the good people at HelloWallet, if a huge chunk of men and women are using their retirement savings vehicles as an ad-hoc emergency savings account why not have employers first help their employees set up a real emergency savings account before addressing retirement savings? Putting money aside for retirement while shortchanging emergency monies is like building the second floor of a house while ignoring the foundation. It leaves people, as HelloWallet's CEO Matt Fellowes puts it, "dangling from the top of a ladder without any rungs underneath them."

When viewed this way, our current 401(k) structure is only guaranteed to benefit the 401(k) plan providers charging both employers and employees various fees related to benefit and money management costs. Employees, after all, face stiff tax penalties if they borrow against their 401(k) funds and can’t pay the money back. They are also, if they lack an emergency fund, likely being given financial advice inappropriate for their financial situations. If someone needs access to quick cash, a target date fund set for a 2025 is not place to stash their savings. As for employers, why spend money on matching funds for a benefit that doesn’t serve a significant proportion of their workers? Why would you want to do that?

Don’t get me wrong. HelloWallet's proposal is not going to be able to address the structural economic reasons so many of us have trouble savings – the stagnating and falling salaries, problems with job loss, rising health care costs and the like. Nor does their suggested fix even ask whether we should be using the rather flawed 401(k) vehicle for retirement savings or if there is a better way for us to ensure the financial future of the future elderly. Finally, I am far from the first to notice HelloWallet most certainly has a stake in this argument (that honor goes, I believe, to my pal Rich Eisenberg over at Next Avenue). They contract with numerous Fortune 500 companies to help employees with money management issues and, after this report, I’ve no doubt even more potential corporate clients will be asking HelloWallet about their services.

However, just because it is hard to save money that doesn’t mean we should just surrender to whatever dire economic fate awaits us. And if HelloWallet can get more people to build up an emergency savings account and, as a result, boost their retirement savings -- even that savings goes to an imperfect vehicle -- they will have definitely done a good thing.